Kletchko et al. v. Gerhardt et al., (1984) 36 Sask.R. 50 (QB)

• Judge: MacLeod, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: July 27, 1984
• Jurisdiction: Saskatchewan
• Citations: (1984), 36 Sask.R. 50 (QB)

Kletchko v. Gerhardt (1984), 36 Sask.R. 50 (QB)

MLB headnote and full text

Kletchko, Kletchko and Schulhauser v. Gerhardt and Patterson

(No. 2999 A.D. 1982)

Indexed As: Kletchko et al. v. Gerhardt et al.

Saskatchewan Court of Queen's Bench

Judicial Centre of Regina

MacLeod, J.

July 27, 1984.

Summary:

The defendants became interested in the invention of a propane conversion valve which would improve automobile efficiency by using propane. The defendants invested in licenses to purchase the valves and set up businesses to install them. The defendants caused the plaintiffs to also become interested in the venture and got them to invest $66,000.00. The plaintiffs were under the impression that they were investing in a share of a license, but the defendants had them actually sign a request for an allotment of shares. The defendants were subsequently convicted of offences under the Securities Act. The plaintiffs served notice of rescission of their agreement to buy shares pursuant to s. 155 of the Act and brought an action to recover their investment.

The Saskatchewan Court of Queen's Bench, in allowing the plaintiffs' claim, held that the sales by the defendants were in violation of the Securities Act because the sales were made by persons who were not licensed as required by the Act and the shares were in primary distribution and trade in them by any person licensed or unlicensed was prohibited.

Securities Regulation - Topic 5345

Trading in securities - Illegal trading - Remedies - Rescission - The Securities Act (Sask.), s. 155, provided that where a person traded in securities every person who entered a contract to purchase any of the securities was entitled to rescission where the person who traded was convicted of certain offences under the Act - The Saskatchewan Court of Queen's Bench discussed a situation where persons who agreed to purchase shares were entitled to rescission under s. 155 because the trader was convicted for trading while unlicensed and for trading shares, the trade of which was prohibited.

Cases Noticed:

Buchanan et al. v. United Geophysical Company of America et al., [1983] N.W.T.R. 358; 36 A.R. 451, refd to. [para. 49].

Statutes Noticed:

Securities Act, R.S.S. 1978, c. S-42, sect. 2(1)(dd) [para. 34]; sect. 155 [paras. 21, 35].

Counsel:

K.W. Noble, for the plaintiffs;

D.G. MacKay, for the defendants.

This case was heard before MacLeod, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Regina, who delivered the following decision on July 27, 1984: